Wednesday update

SHORT TERM: volatility galore, DOW +257

Overnight, after the market sensed a Trump victory, ES went into bungee cord mode. At one point in time ES was down over 100 SPX points. After ES hit the 5% limit down, was halted for 5 minutes, sanity returned to the futures market. Large swings occurred throughout the night, and Asian markets lost 3.0%. Europe opened near its lows, began to recover, and gained 1.4% on the day. The market gapped down at the open to SPX 2125, rallied to 2141, dropped to 2127, then hit 2145 all within the first half hour of trading. The market had closed at SPX 2140 yesterday. At 10am wholesale inventories were reported higher: 0.1% v -0.2%. The market then dropped to SPX 2130 by 10:30, and then began to rally. Just before noon the SPX hit 2163. Then 20 minutes later it was SPX 2151. After that the market rallied to SPX 2170 by 3:30, only to pullback to 2160, before closing at 2163.

For the day the SPX/DOW gained 1.25%, and the NDX/NAZ gained 0.75%. Bonds lost 51 ticks, Crude rose 50 cents, Gold slipped $1, and the USD was higher. Medium term support remains at the 2131 and 2116 pivots, with resistance at the 2177 and 2212 pivots. Tomorrow: weekly jobless claims at 8:30, then the budget deficit at 2pm.

The market gapped down at the open, capturing a small segment of last night’s selling. Then right after the open the cash market volatility began. But unlike last night, this was to the upside. After a run from Friday’s close at the OEW 2085 pivot to today’s high near the 2177 pivot, and a number of small waves, the SPX must be nearing the high of the first wave up of this potentially explosive, but still unconfirmed uptrend. The initial liftoff of the two previous impulsive uptrends were about 100 points each. This rally has already risen 85 points. Short term support is at the 2131 and 2116 pivots, with resistance at the 2177 pivot and SPX 2194. Short term momentum ended the day with a negative divergence. Best to your trading!

MEDIUM TERM: DOW uptrending, SPX should follow

LONG TERM: uptrend


About tony caldaro

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208 Responses to Wednesday update

  1. johnnymagicmoney says:

    I almost feel like something is so stinky that we are setting up for a crash

    this just does not look good

  2. kvilia says:

    Dipped my left toe into NUGT.

  3. H D says:

    guess nobody liked the DSX idea. You guys have a good 3 day weekend & thank a Veteran.

  4. phil1247 says:

    SmallCap Network Logo
    Trading Alert – Namaste Technologies Inc. (NXTTF) Positioned for Green Rush


    this stock has your name written all over it ……. 😉

  5. wanderer says:

    I am short again, ESZ6 from 2173.75, based on order flow.

  6. johnnymagicmoney says:

    Wells Fargo Gap Up from 45 to 48 and another gap up to 52 in two days ??? Come on man……………….this is so stupid

  7. $XJY just broke a H&S i was talking about a week ago.

  8. lunker1 says:

    This impulse is building a solid base of deep support retests along the way. 2084, 2124, 2151.

  9. Peter Sliney says:

    I would be nice to see some pullbacks but it looks to me that 20,000 Dow is the next big magnetic number before any kind of bear market.

  10. vivelaamo says:

    I’m shorting the DOW here, will be 3rd close above the BB and it is ridiculous above it. I’m very bullish but this is ridiculous. Stop is above 19000

    • mcgcapital says:

      Agree, expecting a very sharp reversal. It’s only a matter of time before this rise in yields causes big problems for the equity market. Look at June 2013 as an example.

      • tommyboys says:

        Rates will have to be way higher to cause any kind of market cluster. Couple points up off of zero is actually bullish. Also we could correct sideways avoiding any “sharp reversal” although anything is always possible 😉

        • mcgcapital says:

          But if historically high valuations have been justified by very low yields and investors searching for yield, then any sort of rise in yields is going to be a negative

  11. If you believe this is a Brexit redux…with CBs pushing markets up…look back.After Brexit,when SPX crossed the 20 d sma,it went up an additional 90 points.Repeat that now.2130 the 20d–2220 is my call for a top.

  12. vivelaamo says:

    I don’t think I’ve ever seen such a move in my life as we’ve seen of Tuesday nights lows. Has anybody else?

  13. johnnymagicmoney says:

    all I have seen over the last two days is panic buying and panic selling in the equity markets. The winners have these massive vertical gap up movements on a bunch of snap assumptions and decisions. Just doesn’t seem to healthy to me

  14. ariez5 says:

    This wild intraday volatility and breadth dispersion is the mark of a topping market. Not today or tomorrow. But I think very soon.

  15. lunker1 says:

    2177 this afternoon?

  16. This move is relentless and still powerful. the pent up momentum was there as I described late last week. As I also suggested it should end no later than med-week of next. Unfortunately there is nothing to derive from that top. It could have a shallow retrace or a more pronounced drop. I don’t know and will therefore defer my bets till I see a clear pattern after this one ends. The corporate tax cut is on its way and should be the first announcement that gets past the Republican controlled house. The trickle down theory is alive and well. the fiscal conservative Republican complaints during Democratic controlled executive branch will be totally silent as they pass these HUGE reductions in taxes (wealthy and corporate). They will most likely offset the costs with a drop in social programs and an attempt to dismantle Obamacare. The very states that got subsidized by Obamacare will revert back to zero health programs and stay the poorest states.

    I mention all this because it should initially be a big boost to Wall Street. I will be waiting for any indication they are about to announce such a thing. this is where fundamentals have an immediate affect on technical moves. I expect a tripling of deficit in 4 years time with us falling into a deep long depression. the stage is set. I have never before made this claim and I am not an alarmist. I deal in logic and analyze the situation. The “fiscal responsible” Republicans already showed their hand during Bush’s administration. It will now get out of control even as they strip all rules and regulations and social programs to the bone. Welcome to the final stages of this super cycle.

    • scottycj1 says:

      Politicians allowed to rule unchecked and without strict guidelines will destroy a society. They act in their own self interests at the expense of the public. One day everything stops working…..and then it starts anew. Why is it so hard to require the country have a balanced budget ? Too simple ?

      • I agree. Capitalism without greed/fear and boom/bust will not happen in my lifetime. I am trying to determine a very hard process in getting the final stage right. Clearly many people over the past 6 years were way off. I hope I come close enough to “capitalize” on it. Debt implosion will occur when creditors fear never getting repaid.

    • johnnymagicmoney says:

      now you are flipping your outlook. I actually think corporate tax deductions and an infrastructure build will be extremely helpful. I am still worried about the amount of debt and the distortion of risk assets. What is going on in yields is scary. No one is talking about emerging markets. They don’t look good here.

    • H D says:

      I hope you’re wrong Gary. US has total GOP control now, even majority of State Governors. It’s time to see all the growth they always promise. A very good opportunity for redemption from the mess they left last time. I’m routing for them. Make some notes about any benchmark you think is a good measure of the economy. GDP, DJI price, housing market, unemployment, tax rates, wars, etc November 2016. Let’s revisit in 2 years.

    • Make America Great! Investment of capital in the means of production is how economies work, not just capitalist ones, but Communist ones as well. Only then the state is the investor, not private citizens. On other words, trickle-down is a nonsensical concept in any framework.

  17. GDX at 23.34…lower BB at 23.Bounce there?

  18. captbara says:

    FB, AMZN looks like both done a 5 wave down off from their ATHs. Just eyeballing the daily charts.

    • captbara says:

      From the ST bullish view, perhaps NAS was waiting for FANG to complete their corrections from Oct. Flats for FB and AMZN and abc’s for NFLX and GOOGL.
      I don’t think there can be any be big 3rd wave up without them so I think they need to bottom around here for the continuing bull case.

    • captbara says:

      Sensing some mini capitulation sentiment from a bunch of tech stocks. This plus the 5 waves down in FANG could be good for a the bounce/trend continuation.

  19. what a rollercoaster ride today

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